Opinion 90-60


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.


REFUSE AND GARBAGE -- Solid Waste Facility (validity of installment purchase contract to finance recycling center under General Municipal Law, §120-w)
PUBLIC CONTRACTS -- Installment Purchases (to finance construction of recycling center under General Municipal Law, §120-w)

GENERAL MUNICIPAL LAW, §§109-b, 120-w: A county may enter into an installment purchase contract to finance the construction of a recycling center under General Municipal Law, §120-w. Such a contract, however, is subject to the provisions of General Municipal Law, §109-b, which relates to installment purchases of equipment, machinery and apparatus, to the extent that such provisions are not inconsistent with General Municipal Law, §120-w.

This is in reply to your request for our opinion concerning a proposed method of financing the design, construction and operation of a county recycling center pursuant to General Municipal Law, §120-w. The proposed financing includes the issuance of certificates of participation evidencing a proportionate interest in future payments under a tax-exempt "lease" agreement between the county and a trustee created to hold title to the facility. We assume for purposes of this opinion that the "lease" agreement contemplated is a lease-purchase or installment purchase contract and not a true lease. You ask whether the agreement would violate General Municipal Law, §109-b.

General Municipal Law, §109-b authorizes a "political subdivision", including a county (see General Municipal Law, §109-b[1]; see also General Municipal Law, §2), to enter into installment contracts to purchase equipment, machinery and apparatus, subject to a number of provisions intended as safeguards against potential abuse (see General Municipal Law, §109-b[3]-[7]; see also 1979 Legislative Annual, p 425; 1981 Legislative Annual, p 186; 1983 Legislative Annual, p 306). Section 109-b(2), as amended by L 1983, ch 704, also provides that "[a] political subdivision shall not have the power to enter into an installment purchase contract except as authorized herein".

We have previously construed the provisions of section 109-b as being applicable to an "installment purchase contract" without regard to whether it is denominated as a "lease purchase" or an "installment purchase" (1989 Opns St Comp, unreported, April 7, 1989; 1980 Opns St Comp No. 80-187, p 49). We have also concluded that section 109-b precludes a political subdivision from entering into an installment purchase contract for the purchase of realty because section 109-b(2) expressly provides that a political subdivision shall not have the power to enter into installment purchase contracts except as authorized by that statute and section 109-b only authorizes such agreements for equipment, machinery and apparatus (1989 Opns St Comp, unreported, supra; cf. Education Law, §1726; Energy Law, §9-103). Therefore, unless a county is permitted to do so by another statute, it is our opinion that a county may not enter into a lease purchase or installment purchase contract for a recycling center.

General Municipal Law, §120-w authorizes a "municipality", including a county (see General Municipal Law, §120-w[1][a]), to enter into certain contracts and agreements for solid waste management, collection and disposal. Section 120-w(2) provides, in relevant part, that:

Notwithstanding the provisions of any other law, general, special or local relating to the length, duration and terms of contracts which a municipality may enter into, any municipality may enter into a contract with any person, upon such terms and conditions as may be agreed upon, for the design, construction, operation, financing, ownership or maintenance of a solid waste management-resource recovery facility ... for a period not to exceed twenty-five years ...

For this purpose, the term "solid waste management-resource recovery facility" includes "recycling centers" (General Municipal Law, §120-w[1][b]). Thus, section 120-w(2) expressly authorizes a county to contract for the "design, construction, operation, financing, ownership or maintenance" of a recycling center, for a period of up to 25 years, notwithstanding the provisions of any general, special or local law relating to the "length, duration and terms" of contracts which a municipality may enter into (see also General Municipal Law, §120-w[4][a]).

General Municipal Law, §120-w(2), which refers to contracts for the "design, construction, operation, financing, ownership or maintenance" of a solid waste facility is, in our opinion, broad enough to encompass both full service contracts where a private operator owns, operates and obtains its own third-party financing for the facility, and financing leases under which the municipality has an option to purchase the facility. Portions of the legislative history of chapter 552 of the Laws of 1980, which added the specific contractual powers presently found in section 120-w(2), indicate that the primary purpose of this amendment was to authorize "full-service contracts" because they "would reduce the risks to be borne by the municipal taxpayers" and offer "greater opportunities for private and revenue financing" (see Governor's Bill Jacket, L 1980 ch 552, Memorandum re Governor's 1980 Program Bill, pp 4-5; 1980 Legislative Annual, p 222-223). These references in the legislative history to service contracts and financing appear to refer to contracts where a private service provider owns and operates a facility and obtains financing from a party other than the municipality. Other portions of the legislative history, however, suggest that a broader interpretation is warranted.

During the debate on this legislation in the Assembly, the Assembly sponsor stated that the bill "not only allows the turnkey but the full service as well". In the context of this debate, "turnkey" was defined as the situation "where you have a private developer in effect put the whole package together, and in effect turn it over to the municipality" (1980 Record of Proceedings, NYS Assembly, p 9975). This reference to turnkey projects indicates an understanding on the part of the legislature that, in addition to full service contracts, the legislation under consideration was broad enough to permit a municipality to purchase a facility constructed by a private entity. Therefore, we conclude that the General Municipal Law, §120-w(2) authorizes a municipality to enter into an installment purchase contract for the acquisition of a solid waste management resource recovery facility (also see General Municipal Law, §120-w[4][c] which permits a municipality to grant to the other party the rights "hereinbefore referred to ... for any purpose which aids in the financing of the construction and operation of a solid waste management-resource recovery facility for the benefit of the" municipality).

We do not believe that 1983 amendment to General Municipal Law, §109-b, which limits the authority of political subdivisions to enter into installment purchase contracts and which was enacted after the existing provisions of 120-w(2), prohibits the use of installment purchase contracts to finance a solid waste facility. As a general rule, a subsequent statute will not be deemed to repeal an earlier one unless the two are in such conflict that both cannot be given effect (McKinney's Statutes, §391). This is especially so where the subsequent statute is more general than the earlier one (McKinney's Statutes, §396). Further, nothing in the legislative history of the 1983 amendment to section 109-b suggests an intention to limit the authority of a municipality to enter into an installment purchase contract pursuant to General Municipal Law, §120-w. Therefore, in our opinion, subdivision two of section 109-b does not negate the authorization in section 120-w to enter into lease financing arrangements for construction of a solid waste facility.

The question remains, however, whether those provisions of section 109-b, which are not inconsistent with section 120-w, apply to installment purchase contracts made under the latter statute. In 1985 Opns St Comp No. 85-52, p 72, we concluded that the competitive bidding requirements of General Municipal Law, §109-b applied to energy performance contracts made pursuant to the Energy Law even though section 9-103(1) of that statute authorized municipalities "notwithstanding any other provision of law... to enter into energy performance contracts for up to ten years duration." In the 1985 opinion, we concluded that the "notwithstanding" language contained in Energy Law, §9-103(1) was intended only to clarify the authority of municipalities to enter into contracts based on energy cost savings rather than fixed dollar amounts and for multi-year terms.

Similarly, we now conclude that the requirements of General Municipal Law, §109-b apply to installment purchase contracts made under section 120-w except where the two statutes are inconsistent. In our view, except to the extent the two statutes are inconsistent, the "notwithstanding" language in section 120-w is not the type of clear, express statement necessary to supersede the legislature's intention that all installment purchase contracts be governed by the provisions of section 109-b.

The only provision of section 109-b which would appear to conflict with the provisions of section 120-w is found in subdivision six thereof. In our view, that provision, which requires public bidding, would not apply to an installment contract entered into pursuant to section 120-w because the provisions of section 109-b(6) are expressly in conflict with the provisions of section 120-w(4)(e) which requires contracts entered into between a municipality and any person pursuant to section 120-w to be awarded pursuant to public bidding or a request for proposals procedure (see Metropolitan Waste v Town of Hempstead, 135 Misc 2d 548, 515 NYS2d 956; see also General Municipal Law, §120-w[7], which requires every contract entered into between a municipality and a project developer for construction of a solid waste management-resource recovery building by the project developer at a cost of $5,000 or more to contain provisions that such building be constructed through contracts awarded in accordance with prescribed competitive bidding requirements). In our opinion, however, the other provisions of General Municipal Law, §109-b, such as those pertaining to executory clauses, down payments, substantially equal installment payments and referendum, are applicable to installment purchase contracts made under General Municipal Law, §120-w.

In summary, we believe that a county may enter into an installment purchase contract to finance the construction of a recycling center because General Municipal Law, §120-w(2), which expressly authorizes municipalities to enter into contracts for the construction, ownership and financing of solid waste facilities, constitutes an exception to the general rule that a political subdivision may not enter into an installment purchase contract to finance the acquisition of real estate. It is our further opinion, however, that a county must comply with the provisions of General Municipal Law, §109-b to the extent that they are not inconsistent with the provisions of section 120-w.

August 30, 1990
Thomas R. Frey, County Executive
County of Monroe